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Repudiation: Difference between revisions
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{{g}}To repudiate a [[contract]] is to indicate | {{a|g| | ||
{{image|Givingthefinger|jpg|This is what I think of your stupid contract}} | |||
}}To [[repudiate]] a [[contract]] is to [[fundamental breach|fundamentally breach]] it: to indicate one’s inability or unwillingness to perform it in such a way as to deprive the aggrieved party of substantially the whole benefit of the bargain represented by the contract. | |||
A “[[Repudiatory breach|repudiatory]]” or “[[Fundamental breach|fundamental]]” [[breach of contract]] is a one which is sufficiently serious to indicate a party has repudiated the {{tag|contract}}, thereby entitling the innocent party to [[terminate]] the {{tag|contract}}. | A “[[Repudiatory breach|repudiatory]]” or “[[Fundamental breach|fundamental]]” [[breach of contract]] is a one which is sufficiently serious to indicate a party has repudiated the {{tag|contract}}, thereby entitling the innocent party to [[terminate]] the {{tag|contract}}. | ||
There is repudiation “proper” — which is words or conduct which makes it clear to the other party that you, wantonly, intend not to perform your obligations even though if you wanted to you could — the metaphorical middle finger — and then there are non-performances of obligations under the contract that are so significant to its fundamental purpose that they amount to the same thing. These do not require the same degree of wantonness. If I owe you money and cannot pay it, then I have repudiated the contract even though I honestly and fervently wish I could perform it. | |||
In this case the innocent party has two options: It can | In this case the innocent party has two options: It can | ||
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The $64,000 question: What counts as “sufficiently serious”? | The $64,000 question: What counts as “sufficiently serious”? | ||
Does “failure to pay an amount due by the time specified in a contract” constitute a [[repudiatory breach]]? Usually failure to pay | Does “failure to pay an amount due by the time specified in a contract” constitute a [[repudiatory breach]]? Usually, in [[financing contract]]s, [[failure to pay]] will be a designated “[[event of default]]” prescribing exactly what should happen — so this question is moot — but it may apply where there is no such term: if your counterparty is a bank, offering you a loan, a [[revolving credit facility]], or some such thing. | ||
If your contract stipulates that “[[time is of the essence]]”, then yes. If not, then it will depend on the circumstances. If the [[failure to pay]] was due to a [[force majeure]]-style external event, probably not. If the failure to pay was accompanied by an [[extended middle finger]], more likely. | |||
{{Event of default vs fundamental breach}} | |||
===Compare=== | |||
*[[Rescission]] of contract | |||
{{sa}} | {{sa}} | ||
*[[Time is of the essence]] | *[[Time is of the essence]] | ||
*[[Event of default]] | *[[Event of default]] | ||
*[[Force majeure]] | *[[Force majeure]] | ||
{{ref}} | |||